Posted by Shoshana/AZ on 9/4/13 4:50pm
Msg #483205

I understand the new RM letter came down today.

Any body know what it said?

Reply by Lee/AR on 9/4/13 5:03pm
Msg #483209

We're waiting for Bear900's translation...C'mon Bear...LOL n/m

Reply by Shoshana/AZ on 9/4/13 5:16pm
Msg #483214

Never mind...here it is

Promised HECM Program Changes Issued

Today, the U.S. Department of Housing and Urban Development officially issued the changes to the HECM program that have been under discussion since last year’s insurance fund audit and have been authorized as a result of the passage of the Reverse Mortgage Stabilization Act by Congress. The changes contained in Mortgagee Letter 2013-27 include:

1. Limits to the amount of loan proceeds that can be disbursed at closing or during the initial 12 months after closing;

2. A new upfront mortgage insurance premium structure;

3. Elimination of HECM Standard and Saver;

4. New PLF tables;

5. A requirement that every prospective borrower undergo a financial assessment (effective for Case Numbers assigned as of January 13, 2014), and

6. Instructions for setting aside funds to pay property charges if a borrower fails the financial assessment.

HUD called for these changes because, since the 2009 housing crisis, the HECM portfolio has experienced major demographic and behavioral shifts that have contributed to additional risks to the Mutual Mortgage Insurance Fund (MMIF). “These critical program changes will realign the HECM program with its original intent, and thereby aid in the restoration of the MMIF and help ensure the continued availability of this important program,” says the mortgage letter.

All of the changes are effective for case numbers assigned on or after September 30, 2013, except for the financial assessment and guidelines for paying mandatory obligations, which become effective January 13, 2014.

Among the details in the Mortgagee Letter are:

Limiting disbursements at loan closing, or during the initial 12 months after closing, to 60% of the Initial Principal Limit. If there are mandatory obligations, such as paying off an existing mortgage, then the disbursements can equal the sum of those obligations, plus an additional 10 percent of the Initial Principal Limit. FHA provides illustrations to help explain the policy and defines what constitutes a mandatory obligation.
As long as the disbursements at closing, or the initial 12 months after closing, do not exceed 60 percent of the Initial Principal Limit, HUD will charge an upfront MIP of 0.50 percent of the Maximum Claim Amount (MCA). If, however, disbursements exceed 60 percent of the Initial Principal Limit, HUD will charge an upfront MIP of 2.50 percent. The existing annual MIP rate of 1.25 percent will continue to be in effect for all HECMs.
HECM Standard and HECM Saver ADP codes will no longer be available in FHA Connection after September 28, 2013.
All HECM Standard or HECM Saver loans that and were assigned a FHA case number on or before September 28, 2013, may be processed as either an HECM Standard or HECM Saver, but only if these mortgages close on or before December 31, 2013.
A financial assessment will be required of all prospective mortgagors on all HECM transaction types, including traditional, refinance, and purchase, for loans with case numbers assigned on or after January 13, 2014. Key components of underwriting HECM transactions include a credit history analysis, a cash flow/residual income analysis, analyzing compensating factors and extenuating circumstances and determining if the HECM applicant has the financial means to continue paying property taxes, insurance and other obligations.
Accompanying the Mortgagee Letter, HUD has published a HECM Financial Assessment and Property Charge Guide that provides underwriting guidance and documentation requirements for completing the financial assessment of HECM mortgagors.

Once we have time to fully digest all of the information, NRMLA will publish a more detailed memorandum

Reply by Shoshana/AZ on 9/4/13 5:22pm
Msg #483216

What's really good is that since I already have an FHA

case number, I haveuntil Dec 31 to close. That give me a chance to get some better comps. I should get my appraisal back tomorrow. I am in a fairly new subdivision. My model is sold out. Two new homes of my model should be done by the end of the month. That will give me 5 really good comps!

Reply by ME/NJ on 9/4/13 5:48pm
Msg #483217

Guess I will see a push on RM apps for the rest of the year. In my area there are many adult communities the avg price of homes range from 130-175K and avg cash out is about 80K. Now limit the amount they can cash out the first year and add they made need to escrow for Taxes and Insurance if they can not pass screening. Plus more fee's this will put a big slow down on these loans come 2014 for me.

I did a refi this weekend in one community this weekend and they turned away the RM because of fee's and adjustable interest each month. They cashed out and wanted to pay each month because they felt each payment was going back to them. It felt good see them do it that way and not a RM. Doing one tonight same thing.

Reply by Shoshana/AZ on 9/4/13 5:58pm
Msg #483219

Probably not. I expect that unless they get their case #

before 9/30, this program will die a horrible death on Jan 1, 2014. When we made our counseling appointment a few weeks ago, the counseling services were already getting filled up.
It really doesn't matter what the interest rate is, when you get a reverse mortgage. It's basically a commitment to stay in the house for the rest of your life. You don't want to take out this mortbgage if you think you might want to move and buy another house.